11 September 2025 | By John Busby
Sept 25 European Mortgage market update
ECB Holds again and Swiss rates held at zero
European Mortgage Market Update
Interest Rate Update: Eurozone and Switzerland
Eurozone: ECB Holds Rates as Inflation Nears Target & Economy Steadies
On 11 September 2025, the European Central Bank (ECB) held its key interest rates steady: the deposit facility rate at 2.00%, the main refinancing operations (MRO) rate at 2.15%, and the marginal lending facility rate at 2.40%. This ends a run of eight consecutive cuts since June 2024 and reflects growing confidence that inflation is aligning with its 2% medium-term target.
The ECB’s updated forecasts see headline inflation averaging 2.1% in 2025, easing to 1.7% in 2026 and slightly rising to 1.9% in 2027. Core inflation is expected to be at 2.4% in 2025, then decline to 1.9% in 2026 and 1.8% in 2027. Eurozone GDP growth is projected at 1.2% in 2025 (up from 0.9%), 1.0% in 2026, and 1.3% in 2027.
President Christine Lagarde emphasised a “meeting‑by‑meeting, data‑dependent” policy stance, noting that inflation is “around our two‑percent medium‑term target.” Market sentiment has shifted; analysts now expect that any further rate cuts this year are unlikely, signalling an end to the easing cycle unless economic data markedly deteriorates.
Switzerland: SNB Maintains Zero Policy Rate, Reluctant on Negatives
The Swiss National Bank (SNB) continues to hold its policy rate at 0.00%, the level established in June 2025. The move was in response to persistent low inflation, including a negative ‑0.1% reading in May.
In a recent interview, SNB Chairman Martin Schlegel stressed that reintroducing negative interest rates would carry “undesirable side‑effects for savers and pension funds,” and that the threshold for such a move remains high. Inflation has remained within the SNB’s 0–2% target range for several months, reducing the case for further rate cuts. Market expectations currently favour continued stability at zero, barring any major economic shock.
European Mortgage Market Rates and Indices
(Indicative & Subject to Borrower Circumstances)
| Market Indicator | Local 20‑year fx | Private Bank Rates |
|---|---|---|
| 3‑month Euribor: 2.00% | France: ~3.9% | 3‑year fix: ~3.3% |
| 5‑year swap: ~2.12%* | Italy: ~3.6% | 5‑year fix: ~3.3% |
| 15‑year swap: ~2.70%* | Spain: ~2.85% | 20‑year fix: ~3.9% |
| Average margin: ~1.30%* | Portugal: ~2.9% | Euro variable: ~3.3% |
| Swiss Base Rate: 0.00% | Swiss: ~1.5% | Swiss variable: ~1.2% |
These rates are generally available to US‑ and UK‑based buyers, typically at 70% LTV. They are indicative only and depend on individual borrower circumstances. Private‑bank transactions often require assets under management amounting to 30–50% of the loan principal. Traverse arranges both purchase and refinancing deals across these jurisdictions and provides full finance guides for each destination.
Case Study: Private Bank Financing Purchase & Heavy Renovations
The story opens
A UK resident sought financing for a €2 million mountain property purchase requiring an additional €2 million of renovation. With no suspensive clause for financing in the purchase agreement, speed was essential.
Traverse closes
We secured a private banking solution in Monaco. The €2 million purchase loan was arranged with €1 million held in assets at the bank. Renovation funds are scheduled for the second half of the loan, to be released once planning permission is granted, on the same terms. The facility is for a 7‑year term, on a variable‑rate basis, with a margin of 1.4% over the 12‑month Euribor (currently ~2.167%), resulting in an APR of approximately 3.57%.